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January 2013 – Client Deck January 2013. 21/2013 1. Market Trends Resulting From Healthcare Reform Mike Suttman / Erick Schmidt – McGohan Brabender 2.

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Presentation on theme: "January 2013 – Client Deck January 2013. 21/2013 1. Market Trends Resulting From Healthcare Reform Mike Suttman / Erick Schmidt – McGohan Brabender 2."— Presentation transcript:

1 January 2013 – Client Deck January 2013

2 21/ Market Trends Resulting From Healthcare Reform Mike Suttman / Erick Schmidt – McGohan Brabender 2. Employer Mandate aka Pay or Play Rules Paul Routh, Esq. - Weprin, Folkerth & Routh LLC 3. Impact Of Penalties To An Employer Grant Reed – McGohan Brabender 4. What Options Should An Employer Consider Grant Reed – McGohan Brabender 5. Summary Comments Mike Suttman / Erick Schmidt – McGohan Brabender Agenda and Presenters

3 Macro Market Trends: 1. Modifications of workforce 2. Growth of self-insurance 3. Options considered by employers 31/2013

4 1.Modification of Workforce – Redefine Employee Status 1. Offshore Employees 2. Replacing Full-Time Employees With Part-Time Employees Small Employers - Attempt to remain <50 employees o Offshore – Do not count o Part-Time – Fractionalize Part-Time Employees Large Employers - Employees to Penalty Free Class o Offshore o Part-Time 41/2013 Note: Anti-Abuse Rules Leased Employees – Still count for employer size and penalty assessment

5 2. Growth of Self Insurance o Higher fees, assessments, taxes, etc. to fully-insured premiums $20 - $30 PMPM o Community rating Was 7:1 to 9:1 Must be 3:1 51/2013

6 Employer Mandates of Pay or Play Rules o Government Issued 144 Pages of Proposed Regulations Plus Q&As – December 28, 2012 o Rules Are Effective Plan Years Beginning On Or After January 1, January 1, 2014

7 Employer Mandates of Pay or Play Rules continued 71/2013 Large Employers 50 or More Full Time Employees Full Time Employee = 30 Hours Per Week Look to Previous Calendar Year Fractionalize Part Time Employees Control Group Rules Apply Small Employers No Penalties

8 Employer Mandates of Pay or Play Rules continued o Potential Penalty for Large Employer Two Types of Penalties 1. Offer No Coverage*; or 2. Offer Coverage That: (A) Not Quality Coverage and/or (B) Not Affordable 81/2013 *5% Safe Harbor Coverage is Affordable if Employees Cost of Single Coverage <9.5% of Wages (Form W-2 Box 1) Safe Harbor 9.5% of FPL for Single = Approximately $90 Per Month

9 Employer Mandates of Pay or Play Rules continued Two Types of Subsidies Under Exchange – Both Based on Income 1. Premium Subsidy 2. Cost Sharing Subsidy Employee Not Eligible for Subsidy if Offered Quality Affordable Coverage 91/2013

10 Employer Mandates of Pay or Play Rules continued Penalty Amounts 1. Offer No Coverage = Number of Full-Time Employees – 30 x $2,000 Annual or $ Per Month. 2. Offer Coverage Not Quality and/or Not Affordable = FTE Who Goes to Exchange and Gets Subsidy x $3,000 Annual or Not To Exceed $ Per Month. 101/2013 Penalty only applies to full- time employees = 30 hours per week

11 Employer Mandates of Pay or Play Rules continued How to Determine Full-Time Status for Penalty Purpose 1. Measurement Period – 3 to 12 months 2. Administrative Period – Up to 90 Days 3. Stability Period – Longer of 6 Months or Measurement Period New Hires Ongoing Employees Need to Keep Records 111/2013

12 Employer Mandates of Pay or Play Rules continued Reports 1. Form W-2 for Health Coverage – 250 or more Form W-2s issued previous calendar year – Effective for 2012 Form W-2s. Fees 1. Patient-Centered Outcomes Research Fee = $1 First Year Then $2 Afterward. October 1, 2012 through October 1, 2019 – Reported on IRS Form Reinsurance Fund - $63.00 Per Person – First Year 121/2013

13 Pay or Play Cost Comparison for ABC Company Overview 131/2013

14 141/2013 Pay or Play Comparison for ABC Company For Policy Year Starting in 2014

15 Options Considered by Employers: What does the solution look like? ** Optimal solution will allow an employee to pursue the option that is best for themselves and the employer – stay on Employers Plan or go to Health Care Exchange. Create a Leash for Future Years or Connection to Employees o Penalties o In definition of full-time (ex ) 151/2013


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